Suppose that the federal government determines the total level of municipal sewage that can be discharged by cities along a river.If the cities are able to buy and sell rights to the total discharge level among themselves,then the government's environmental policy includes:
A) emissions taxes.
B) Pigouvian subsidies.
C) tradable emission permits.
D) command and control.

Question

Quizplus · Accepted Answer

The option of buying and selling rights to the total discharge level among themselves implies the use of tradable emission permits. This policy allows for economic efficiency and flexibility, as cities with lower costs of reducing their emissions can sell their permits to cities with higher costs of reducing their emissions. It also creates an incentive for cities to reduce their emissions and earn profits from selling their permits. This approach is often preferred over command and control policies that may be more rigid and less cost-effective. Emissions taxes and Pigouvian subsidies can also be effective policies, but they do not allow for the same degree of flexibility and trading as tradable emission permits.

Suppose That the Federal Government Determines the Total Level of Municipal